EX-99.1 2 a09-28964_1ex99d1.htm EX-99.1

Exhibit 99.1

 

 



 

 



 

 



 

 

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Corporate Governance

 

Progen Pharmaceuticals Limited (the Company) is a dual listed Australian company. Our primary listing is on the Australian Securities Exchange (ASX) and our secondary listing is on the US NASDAQ Capital Market (NASDAQ).

 

The Board has the ultimate responsibility for the strategy and performance of the Company on behalf of the shareholders to whom they are accountable. The Board are committed to achieving and demonstrating the highest standard of corporate governance through setting values and policies which underlie business activities ensuring transparency and protecting stakeholders’ interests.

 

In setting these values and policies, the Company has considered the ASX Corporate Governance Council’s Principles and Recommendations (2nd Edition) (ASX Recommendations) and relevant US requirements arising from our NASDAQ listing and continuously strives to develop and improve corporate governance processes and standards.

 

Formal written policies and/or disclosure practices have been disseminated throughout the organisation and measures are in place to achieve compliance.

 

The Company’s practices are largely consistent with the ASX Recommendations and unless otherwise stated, the corporate governance framework operated throughout the entire year.

 

A detailed description of the Company corporate governance framework follows, for ease of reference this section is structured to be consistent with the ASX Recommendations.

 

LAY SOLID FOUNDATIONS FOR MANAGEMENT AND OVERSIGHT

 

The Board recognises the need to clearly delineate its own roles and those of Management. In its Charter, the Board has formalised a list of those responsibilities reserved for itself and has delegated certain authority to Management.

 

A copy of the Board Charter can be found on the Company’s website.

 

The Remuneration Committee reviews remuneration policies and practices generally and specifically is responsible in assisting the Board of Directors of the Company in fulfilling its responsibilities in relation to the remuneration of the Board and the senior executives. The Board Charter states the Board is responsible for the selection, appointment and succession planning process of the Company’s Chief Executive Officer.

 

Due to a large amount of executive and Board level turnover throughout the year, performance evaluations of executive management did not take place during the reporting period.

 

STRUCTURE THE BOARD TO ADD VALUE

 

The majority of the Company’s Board is currently comprised of independent directors that have a variety of complimentary skill sets. Following the removal of four directors at a general meeting of shareholders, the remaining board engaged a third party consultancy firm to recruit professional, independent directors with the appropriate expertise required by a publicly listed pharmaceuticals company. As a result of this review, four independent, non-executive directors were appointed: Mr. Stuart James, Dr. Gordon Schooley, Dr. Julie Cherrington and Dr. John Chiplin. Mr. James was appointed non-executive chairman.

 

Details on Board members, their qualifications and dates of service are included in the Directors’ Report.

 

The Company has a procedure in place allowing directors to seek independent professional advice at the Company’s expense.

 

The non-executive directors confer regularly without the involvement of the Chief Executive Officer and Company Secretary.

 

Letters of appointment are provided to all new non-executive directors.

 

Each member of the Board is committed to spending sufficient time to enable them to carry out their duties as a director of the Company. The number of meetings of the Company’s Board of Directors, and of each Board Committee held during the year ended 30 June 2009 is found within the Directors’ Report.

 

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Progen does not have a separately established nomination committee because the duties and responsibilities typically delegated to such a committee are accepted as being the responsibility of the full Board. The Board does not believe that any marked efficiencies or enhancements would be achieved by the creation of a separate nomination committee and believes the existing arrangement is appropriate for a company of Progen’s size and stage of development.

 

The non-executive directors are appointed for specific terms under the Company’s Constitution and subject to re-election in compliance with the ASX Listing Rules and the Corporations Act 2001.

 

PROMOTE ETHICAL AND RESPONSIBLE DECISION-MAKING

 

The Progen Board recognises its responsibility to set the ethical tone and standards of the Company. Directors sign a letter of appointment which outlines the fiduciary relationship that exists between the director and the company. The Company has in place Codes of Ethics, Business Conduct and an Insider Trading Policy that have been put in place to clearly articulate acceptable practices for directors, senior executives and employees.

 

The Code of Ethics for Executive Directors and Chief Financial Officer sets out the rules regarding individual responsibilities to Progen, the public and our stakeholders. Additionally, Progen has a Code of Business Conduct which applies to all officers, senior executives and employees. Both of these codes are available on Progen’s website, along with the insider trading policy.

 

SAFEGUARD INTEGRITY IN FINANCIAL REPORTING

 

Progen recognises that an Audit and Risk Management Committee is an efficient mechanism for focusing on issues relevant to the integrity of the Company’s financial reporting. A new Audit and Risk Management Committee has been recently appointed, consisting of three independent, non-executive directors. The members of the Audit and Risk Management Committee, details of their skills and expertise and the number of meetings held are contained in the Directors’ Report.

 

For the 2009 financial year, the Company is classified by the Securities and Exchange Commission (SEC) as a non accelerated filer and therefore has relief from compliance with the Sarbanes-Oxley Act 2002 (USA). Many internal controls and corporate governance measures are still in operation from prior compliance with the Act.

 

The Audit and Risk Management Committee operates under a Charter that outlines the Committee’s responsibilities, including overseeing the role and independence of the external auditors.

 

A copy of the Audit and Risk Management Committee Charter is available on the Progen website.

 

MAKE TIMELY AND BALANCED DISCLOSURE

 

Progen has put in place mechanisms designed to ensure that all investors have equal and timely access to material information concerning the Company. The Company is aware of the Life Sciences Best Practice Guidance Note and where possible prepares company announcements that comply with this Note.

 

Progen maintains a Communication Policy which is designed to ensure that all investors have equal and timely access to material information concerning the Company. Under the policy, Company announcements with the exception of administrative releases are approved by the CEO, the Company Secretary and a non-executive director. Once announced to the ASX all releases are posted onto the Progen website.

 

The Communication Policy can be found in the corporate governance section of the Progen website.

 

RESPECT THE RIGHTS OF SHAREHOLDERS

 

Progen’s Communication Policy sets out Progen’s approach in effectively communicating with its shareholders. Additionally, Progen takes advantage of current technologies, including its website and email to communicate directly with its shareholders.

 

Progen’s website contains information about the Company including its activities, core technology platforms, details and background on its executive officers. In addition all ASX releases are placed on the Company’s website after they are announced to the ASX and remain on the website for several years.

 

Progen encourages shareholder participation at its general meetings. When drafting Notice of Meetings, particular consideration is given to the ASX Guidelines for Notices of Meetings. The guidelines assist in improving such participation through the design and content of the Notices.

 

RECOGNISE AND MANAGE RISK

 

Progen does not currently have a formal risk management policy. As a biotechnology business, Progen faces risks including those associated with the failure of its technologies or inability to successfully commercialise its drug candidates.

 

Both management and the Board assess and address possible risk factors on an ongoing basis, including management meetings, Board Meetings and Audit and Risk Management Committee Meetings.

 

REMUNERATE FAIRLY AND RESPONSIBLY

 

The Remuneration Committee consists of three non-executive directors. Details, skills and experience of the members are contained in the Directors’ Report. The Progen Board currently considers that a committee comprised of two Directors is adequate given the size of the Company.

 

This Committee operates under a formal Remuneration Committee Charter which was approved by the Progen Board during the 2009 financial year.

 

The Remuneration Committee reviews internal remuneration policies and practices generally and makes specific recommendations to the full Progen Board on remuneration packages of the Company’s executive salaries while taking into consideration performance, relevant comparative information and independent expert advice where necessary.

 

Further information on Directors’ and Executives’ remuneration is set out in the Remuneration Report section of the Directors’ Report.

 

The following documents are disclosed in full on the Company’s website:

·      Board Charter

·      Progen Code of Business Conduct

·      Communication Policy

·      Insider Trading Policy

·      Code of Ethics for Executive Directors and Chief Financial Officer

·      Audit and Risk Management Committee Charter

·      The Progen Directors and Employee Option Incentive Plan Rules

·      Remuneration Committee Charter

 

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Directors’ report for the year ended

30 June 2009

 

Directors’ Report

 

Your directors present their report on the consolidated entity consisting of Progen Pharmaceuticals Limited ACN 010 975 612 and the entities it controlled at the end of, or during, the year ended 30 June 2009.

 

01 DIRECTORS

 

Mr T. Justus Homburg and Mr Stephen Chang were directors of Progen Pharmaceuticals Limited during the whole of the financial year, resigning on 1 July 2009.

 

Prof John Zalcberg resigned as Non-executive director on 4 September 2008.

 

Mr Linton Burns resigned as Company Secretary on 10 December 2008 and as Chief Operating Officer on 9 January 2009.

 

Mr John Lee was appointed Company Secretary on 10 December 2008, resigning on 3 April 2009.

 

Dr Mal Eutick, Mr Patrick Burns, Mr John Lee and Mr Robert Williamson were removed as directors at a General Meeting of shareholders on 27 March 2009.

 

Dr Wolf Hanisch was appointed as director on 27 March 2009, resigning on 1 July 2009.

 

Mr Paul Dixon was appointed as Company Secretary on 3 April 2009.

 

Dr John Chiplin, Dr Gordon Schooley, Dr Julie Cherrington and Mr Stuart James were appointed directors of Progen Pharmaceuticals Limited on 1 July 2009 and remained directors up to the date of this report.

 

Mr Heng Hsin Tang, Mr Joe Yeh-Chiao Lin and Mr Thomas Burt were appointed as directors at a General Meeting of shareholders on 17 July 2009 and remained directors up to the date of this report.

 

02 DIVIDENDS

 

No dividends have been paid or declared during the period and the directors do not recommend the payment of a dividend for the year ended 30 June 2009 (2008: Nil).

 

03 RESULTS AND REVIEW OF OPERATIONS

 

Company Overview

 

The principal activities of Progen Pharmaceuticals Limited during the year continued to be:

1.             Discovery, research and development of potential biopharmaceutical therapeutics for the treatment of human diseases; and

2.             The provision of contract services related to the process development, manufacture and quality assurance of biological products.

 

The Company’s objective is to build a sustainable biotechnology business through the discovery, development and commercialisation of small molecule-based therapeutics for cancer and other serious diseases.

 

OPERATING AND FINANCIAL REVIEW

 

Operating Results for the Year

 

To be read in conjunction with the attached Financial Report.

 

The consolidated operating result for the year ended 30 June 2009 was a loss of $5.467 million, being a decrease of 79.1% over the prior year loss of $26.148 million.

 

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The following table summarises the consolidated results:

 

 

 

% Change

 

2009

 

2008

 

 

 

 

 

$’000

 

$’000

 

Revenue

 

(23.7

)

4,940

 

6,478

 

Other Income

 

526.3

 

7,021

 

1,121

 

Research and development expenditure

 

(56.3

)

(7,049

)

(16,145

)

Manufacturing expenditure

 

(38.2

)

(1,683

)

(2,721

)

Administrative and corporate expenses (incl finance costs)

 

(19.9

)

(8,696

)

(10,852

)

Cash and equity based payments to Medigen

 

(100.0

)

 

(4,029

)

Operating loss from continuing operations

 

(79.1

)

(5,467

)

(26,148

)

 

The decrease in research and development expenditure for the year ended 30 June 2009 reflects the cancellation of the PI-88 Phase 3 post resection liver cancer trial (“PATHWAY”) in July 2008, partially offset by an increase in expenditure associated with the inclusion of a full year of Progen Pharmaceuticals Inc. results which was acquired in February 2008.

 

Earnings / (Loss) per Share and Net Tangible Assets per Share

 

 

 

% Change

 

2009

 

2008

 

 

 

 

 

cents

 

cents

 

Basic and diluted loss per share

 

(76.9

)

(10.0

)

(43.3

)

Net tangible assets per share

 

(5.9

)

112.0

 

119.0

 

 

Management Discussion and Analysis

 

Revenue and Other Income

Government grant income reduced by 93.7% in 2009 due to the completion of the AusIndustry Commercial Ready grant which expired in August 2008. Interest income reduced in 2009 due to both reduced funds on deposit following the Company’s $39.4 million share buy-back scheme; and deteriorating deposit interest rates throughout the year. These reductions were offset by net unrealised foreign exchange gains of $6.3 million and an increase in manufacturing revenue of 58.7% for the 2009 financial year.

 

 

 

% Change

 

2009

 

2008

 

 

 

 

 

$000

 

$000

 

Revenue and other income

 

 

 

 

 

 

 

Government grants

 

(93.7

)

83

 

1,316

 

Manufacturing

 

58.7

 

1,724

 

1,086

 

Other, including interest and unrealised foreign currency gain

 

86.4

 

10,154

 

5,446

 

Total revenue and other income

 

52.4

 

11,961

 

7,848

 

 

Research and Development (R&D) Expenditure

Research and Development (R&D) Expenditure

The primary activities of the R&D division for the entire year were:

1.          The clinical development of PG11047 and the Phase 2 PI-88 melanoma program;

2.          Preclinical development of PG545 and PG562

3.          The heparan sulfate mimetic drug discovery and preclinical program, and the epigenetics drug discovery program.

 

Expenditure on our Research and Development initiatives decreased year on year by 56.3% to $7.049 million, primarily due to the reduced research activity following the cancellation of the PATHWAY Phase 3 trial in July 2008. Progen expended $0.699 million on the ongoing PI-88 Phase 2 Melanoma trial (2008: $1.041 million), and $2.893 million on drug discovery across PG545, PG562 and PI-166 (2008: $3.364 million). Expenditure of $2.037 million was booked against the ongoing PG11047 Phase 1 trial in the United States and a further $0.693 million was related to PI-88.

 

Manufacturing

Pharmasynth operates a “currently Good Manufacturing Practices”, or cGMP, certified manufacturing facility that provides contract manufacturing services to the biotechnology industry, earning revenues on a fee for service basis across the pharmaceutical, biotechnology and veterinary industries. Pharmasynth also holds the rights to the PI-88 technology and will therefore continue to manufacture PI-88 API for Global TransBiotech, as well as receive all milestone and royalty payments prescribed in the licence agreement between Pharmasynth and Global TransBiotech Inc.

 

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Revenues earned by this division increased 58.7% to $1.724 million in 2009 (2008: $1.086 million).

 

The segment result in the manufacturing business was a profit of $41,000, compared to a loss of $1.635 million in the previous year. This increase was due to additional manufacturing contracts in 2009, as well as a reduction in staff and contracting costs from the prior year.

 

Liquidity

 

The Company ended the financial year with cash and cash equivalents totalling $28.045 million compared with $76.748 million at the previous year-end. The material change in cash is primarily due to the off market share buy-back completed in April 2009, totalling $39.420 million.

 

Cash and cash equivalents at 30 June 2009 were represented by of a mix of highly liquid interest bearing investments with maturities ranging from 30 to 90 days and deposits on call. These investments do not constitute any material financial market risk exposure. During 2009, the group reduced its US Dollar holdings significantly following the termination of the PATHWAY Phase 3 trials, maintaining a small balance to service the US operating subsidiary, Progen Pharmaceuticals, Inc.

 

Cash Flows

Cash of $15.846 million was disbursed during the year to fund consolidated net operating activities, compared to $15.623 million in 2008. Savings from the cancelled PATHWAY trials were offset by cash outflows for management consultants, legal fees and the settlement of the remaining PATHWAY liabilities, which made up the bulk of the $5.092 million decrease in trade and other payables throughout the year.

 

Cash outflows from financing activities of $39.420 million relates entirely to the off-market, equal-access share buy-back undertaken by the company in April 2009. The shares were bought back at $1.10 which was $0.22 more than the volume weighted average price over the 60 days prior to the date of the buy-back. The buy-back was carried out to return funds to shareholders following the reduced cash requirement of the company due to the cessation of the PATHWAY Phase 3 trial.

 

Funding Requirements

Currently there are no significant commitments for capital expenditure. However, the group expects to incur substantial future expenditure in light of the oncology clinical programs and drug discovery programs. The company has continued funding the Phase 1 clinical trial assessing the safety of PG11047 alone and in combination with approved cancer drugs. The Phase 2 PI-88 trial in melanoma is currently treating its final patients and is expected to be completed during 2010. Preclinical studies in the PG545, PG562 and PG11144 compounds will continue throughout the 2010 financial year. The group’s heparan sulfate mimetic drug discovery program is now fully funded by the company following the completion of the AusIndustry Commercial Ready grant which expired in August 2008.

 

At 30 June, the Group has outstanding commitments of $2.446 million, of which $1.439 million relates to the Phase 1 clinical trial of PG11047 and $233,000 is committed to the PI-88 Phase 2 melanoma trial. The group has also committed to paying its various insurance premiums of $432,000 over the next fiscal year.

 

No further funds are expected to be expended with regard to the PATHWAY trial termination.

 

Future cash requirements will depend on a number of factors, including the scope and results of preclinical studies and clinical trials, continued progress of research and development programs, including in-licensing and corporate development activities, the ability to generate revenues from contract manufacture services, the ability to generate revenues from the commercialisation of drug development efforts and the availability of other funding.

 

04 SIGNIFICANT CHANGES IN THE STATE OF AFFAIRS

 

(i) Termination of PATHWAY Trial

 

Following a strategic review during July 2008, the Company discontinued the PI-88 Phase 3 study in liver cancer. The strategic review was triggered by an accumulation of factors that impacted the commercial return for the Phase 3 PATHWAY trial. Such factors included:

 

· Significant delays due to:

 

· slower than expected regulatory processes in China, Korea and Vietnam;

 

· slower than expected initiation of clinical sites;

 

· slower than expected recruitment of patients into active sites; and

 

· the launch of a competitive Phase 3 trial in the same indication.

· The absence of a global partner willing to meaningfully develop and commercialise PI-88, eroding the commercial viability of the product.

 

(ii) Transfer of manufacturing to Pharmasynth Pty. Ltd.

 

On 2 July 2008 the Company spun-out its manufacturing business as a wholly owned subsidiary company, PharmaSynth Pty Ltd (PharmaSynth). PharmaSynth provides contract pharmaceutical manufacturing services, also holding the intellectual property rights and providing the technical and manufacturing support for muparfostat (formerly PI-88). The financial impact of this spin-out was limited to the payment of stamp duty amounting to $44,000.

 

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(iii) Termination of PI-166 Development

 

In addition to and as part of the strategic review, the Company also decided to terminate further development of its Phase 1 compound PI-166, based on a commercial assessment of the market and the approval of competing compounds in this indication.

 

(iv) License of muparfostat (formerly PI-88) to Global TransBiotech Inc.

 

On 30 June 2009, PharmaSynth Pty Ltd executed a binding agreement with Global TransBiotech Inc for the global licensing of muparfostat, the group’s lead anti-cancer product formerly known as PI-88. Under the agreement, Progen will retain the development and commercialisation rights of muparfostat in Australia while PharmaSynth will provide the technical and manufacturing support to US-based Global TransBiotech to develop and commercialise muparfostat elsewhere in the world, with an initial focus on Taiwan, China, Hong Kong and Singapore.

 

The licence agreement provides for future milestone payments to the Group of up to US$5 million, as well as royalties on muparfostat sales.

 

05 SIGNIFICANT EVENTS AFTER THE BALANCE DATE

 

No significant events have occurred after the balance date.

 

06 LIKELY DEVELOPMENTS AND EXPECTED RESULTS

 

The likely developments in the year ahead include:

 

1. Providing necessary support to GlobalTransbiotech in order to reach value inflection milestones;

2. Advancing the clinical development of PG11047;

3. Continuing to advance our drug discovery programs with the objective of identifying potential new drug candidates from our epigenetics and small molecule heparanase drug discovery platforms;

4. Continuing preclinical work on the 500 series toward formal preclinical studies and filing of a US FDA IND; and

5. Aggressively pursuing M&A opportunities and in-licensing to supplement the existing drug development pipeline.

 

Our overall goal is to build a sustainable biotechnology company that has a well diversified and deep pipeline of drug candidates in development.

 

07 DIRECTORS – QUALIFICATIONS, EXPERIENCE AND SPECIAL RESPONSIBILITIES

 

Directors in office at the date of this report

 

Mr Stuart James BA Honours

Independent Non-Executive Chairman

Finance and Audit Committee Member, Remuneration Committee Member

Mr James has more than 30 years experience across the health care, financial services and logistics industries. He has broad based business experience in executive roles, including Managing Director of Colonial State Bank and most recently as Managing Director and Chief Executive Officer of Mayne Group Limited, where he was responsible for the transformation of the Group into Symbion Health Limited and Mayne Pharma Limited. Mr James is currently Chairman of Pulse Health Limited, Prime Financial Group Limited, and the Balnave Capital Group and he is on the Board of Directors of Wolters Kluwer NV, the international publisher based in The Netherlands. He has previously held board positions with Coneco Limited (Chairman), Mayne Group Limited, FH Faulding and Co Pty Ltd and The Smith Family.

 

Dr Julie Cherrington BS MS PhD

Independent Non-Executive Director

Remuneration Committee Member

Dr Cherrington has 20 years experience across the biotechnology and pharmaceutical industries. She has extensive experience in clinical development and commercialisation programs in the biotechnology industry, encompassing research and development, corporate financing and general management. Dr Cherrington was until recently Non-Executive Director of ChemGenex Pharmaceuticals, and has held senior executive roles at a number of US-based companies including Phenomix Corporation (President), Sugen, Inc. and Gilead Sciences, Inc.

 

Dr John Chiplin BPharm PhD

Independent Non-Executive Director

Audit Committee Chair, Remuneration Committee Member

Dr Chiplin has 25 years experience across the life science and technology industries. He is experienced in both the operational and investment aspects of the drug development process, from research through to development and commercialisation. Dr Chiplin has international board level experience with companies such as Arana Therapeutics (Aus), Cognia (US), Domantis (US) and BT Ignite (UK). He is currently a Non-Executive Director of Science Media Inc. and is Managing Director of Newstar Ventures.

 

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Dr Gordon Schooley BS MS PhD

Independent Non-Executive Director, Audit Committee Member

Dr Schooley has more than 35 years experience in the biotechnology and pharmaceutical industries, with a strong focus on research and regulatory approvals. He has held senior executive roles with a number of companies including Pacira Pharmaceuticals, Skyepharma PLC, Ista Pharmaceutical Inc and Alliance Pharmaceuticals Corp. Dr Schooley has acted on the board of Topigen Pharmaceuticals Inc and Astralis Limited and currently consults to companies regarding pre-clinical and clinical development and regulatory approval processes.

 

Mr Heng Hsin Tang B.Eng(Hons) MBA

Non-Executive Director

Mr Tang has a bachelor’s degree in Civil Engineering with honours, and an MBA from the University of Queensland. Mr Tang has more than 10 years experience in project and financial management in engineering and property development, specialising in feasibility studies, cash-flow management, structural finance and acquisitions for major projects. Until recently, Mr Tang was Commercial Manager for a national property developer, and managed the finance for their Queensland projects valued at over $1bn.

 

Mr Joe Yeh-Chiao Lin BSc MlnfTechSt

Non-Executive Director

Mr Lin is an accomplished IT professional with demonstrated success in business process management, strategy planning, and project management. He has 10 years experience in research and development, commercialisation and general management in the information technology industry. He is currently a researcher and a PhD candidate of computer science at the University of Queensland. He has also been a project manager for an international organisation since 2001. His main research interests are innovative solutions for business information systems that span several areas including business process management, data quality management, scientific workflows and service oriented computing.

 

Mr Thomas Burt

Non-Executive Director

Mr Burt has had over 40 years experience across a number of industries including telecommunications, postal operations, logistics, property management and development and management consulting. He attended the University of Hawaii Advanced Management Program in 1988 and the Mt Eliza Business School Directors’ Course in 1991. Mr Burt has held positions including Managing Director, New Zealand Post Properties Ltd, Managing Director, Total Logistics Company Ltd, National General Manager Facilities Management, Telstra, National General Manager Program Office and Service Improvement, Telstra and Manager International Business Development Asia-Pacific for Lockheed Martin Distribution Technologies. Over the past 4 years, Mr Burt has worked for various companies in a management consulting role providing advice and recommendations for improvements in general business disciplines and identifying M&A opportunities as well as undertaking a one year special assignment for Lockheed Martin Overseas Corporation.

 

Directors who were in office during the year, but not at the date of this report

 

Malvin Eutick, B.Sc. (Hons) Ph.D. OAM

Independent Non-Executive Chairman

Audit Committee Member

Dr Eutick joined Progen’s board on 10 March 1999. Dr Eutick has 25 years experience in the medical and pharmaceutical industry including with companies such as Pfizer and Pharmacia.

 

In 1993, Dr Eutick founded and developed the pharmaceutical company, Phebra (formerly Pharmalab Pty Ltd), which supplies primarily hospitals in Australia and worldwide with critical drugs used in accident and emergency situations and the ICU. In 2000, he acquired the sterile medical device company, TUTA Laboratories Pty Ltd, from a Japanese multinational and recently coordinated its sale to the safety medical and collections solutions company BMDI International (ASX:BMI).

 

Dr Eutick was awarded the Medal of the Order of Australia for services to biotechnology in 1995. He has previously served as Chairman of the Australian biotechnology company, BioQuest Ltd and was Deputy Chairman of the Australian Museum Trust.

 

Dr Eutick is also currently a Director of BMDi-TUTA Ltd (ASX:BMI) (appointed in March 2008) and a number of private companies involved with drug innovation and development.

 

T Justus Homburg, BA, MA, DRS, MBA

Managing Director

Mr Homburg was appointed Managing Director and CEO in March 2006 having joined Progen as COO January 2006. Mr Homburg has had an international career working in the pharmaceutical and life sciences industries in the US, Australia, Europe and Asia. His experience ranges from the multi-national biotechnology giant Monsanto Company through to start up organisations such as Chirogen.

 

Mr Homburg spent more than a decade at Monsanto Company (1990 – 2001) and during his senior management time there he focused on new technology and business commercialisation, technology in and out-licensing, mergers and acquisitions, joint ventures, capital raisings, and the development of international markets. His roles included Regional Business Management (Monsanto Chemicals), Division Management (Growth Enterprises), and Strategic Planning (Monsanto Agricultural Products).

 

Prior to his business career, Mr Homburg held a faculty position at the University of Michigan and was a Fulbright Scholar. He holds an MBA from the University of Washington and degrees from Iowa State University, Southern Illinois University and The University of Utrecht.

 

Dr Wolf Hanisch, Ph.D. BioChem Eng, FAICD

Independent Non-Executive Director

Dr Hanisch has nearly 30 years experience in managing small to medium size companies through the early stages of drug development. His main focus has been on the healthcare field, particularly biotechnology, since its inception in 1979 in California. His recent experience has included CEO, founder and director of CBIO, CEO of Bresagen and Non-executive director of Analytica Ltd and Psiron Ltd. Prior to his Australian experience Dr Hanisch spent two decades working in various international scientific positions at IDEC Corporation (now Biogen IDEC), Cetus Corporation and Abbot Laboratories.

 

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John Lee, B.Com, B.Edu, MBA, FAICD

Independent Non-Executive Director

Audit Committee Member

Mr Lee joined Progen as a non-executive director in March 2008. In 1987, Mr Lee founded Stockholder Relations, an Australian-based management consultancy specializing in corporate advisory, investor relations and corporate governance. Currently, Mr. Lee is non-executive chairman of Portland Orthopedics Limited (ASX:PLD) (appointed in October 2005), non-executive chairman of Milvella Limited (appointed in October 2007) and a non-executive director of TMG International Pty Ltd (appointed in May 2008).

 

Prior to founding Stockholder Relations, Mr. Lee served Woolworths Limited (ASX:WOW), as Chief General Manager Corporate Services and was a member of Woolworth’s executive committee.

 

Mr Lee received his MBA from the University of Melbourne, in addition to a B Comm. and post-graduate degree in Education. He is a Senior Associate of the Financial Services Institute of Australia (FINSIA) and a Foundation Fellow of the Australian Institute of Company Directors.

 

Stephen Chang, B.Eng

Non-Executive Director

Remuneration Committee Member

Mr Chang is a founding director of Progen Pharmaceuticals Limited and has served as chairman in the period from 1990 to 1994 and 1999 until March 2008. He served as chairman of Taiwan-based Medigen Biotechnology Corporation during its inauguration. Mr Chang was general manager and director of Australia Pacific Electric Cables Pty Ltd and is currently director of Capac International Pty Ltd. Prior to 1987, he was Technical Manager and Senior Engineer with Taiwan Pacific Group, a large Taiwanese conglomerate specialising in the IT industry.

 

John Zalcberg, M.D., Ph.D. OAM

Independent Non-Executive Director

Professor John Zalcberg joined Progen as a non-executive director in May 1995. In 1986, he was appointed Director of Medical Oncology at the Heidelberg Repatriation Hospital (HRH) in Melbourne, Australia. In 1996, he became the Director for Cancer Services at the Austin and Repatriation Medical Centre. Since 1997, Professor Zalcberg has been the Director of the Division of Haematology and Medical Oncology at the Peter MacCallum Cancer Centre and was also appointed as Chief Medical Officer in 2007. He continues to practice in GI oncology and has been a Principal and Clinical Investigator of numerous clinical studies.

 

In 1987, Professor Zalcberg helped found the Lorne Cancer Conference, now recognised as one of Australia’s major cancer research conferences. He is also a founding member and is the current Chair of the Board of the Australasian Gastrointestinal Trials Group (AGITG). He is a Member of Cancer Trials Australia and past Board Member of the NSW Cancer Institute (2003-2005). From 2000-2002 he was also President of the Clinical Oncological Society of Australia. In 2007 Professor Zalcberg was also appointed as a Member of the Victorian Policy Advisory Committee on Clinical Practice and Technology (VPACT) and Member of the Consultative Council of the Victorian Cancer Agency (VCA).

 

In 2007 he received a Medal of the Order of Australia Award (OAM), for service to medicine in the field of oncology through initiatives to assist cancer patients and their families and through the promotion of clinical research.

 

Patrick Burns, B.A. LLB (Hons)

Independent Non-Executive Director

Remuneration Committee Member and Audit Committee Chair

Mr Burns was appointed a non-executive director of Progen in March 1999. At the time he was also a Senior Consultant to Early Stage Enterprises, a New Jersey venture capital fund investing primarily in developing technology growth companies.

 

From 1997, Mr Burns has been a member of the Board of Directors of Synbiotics Corp, which specialises in animal health care, and Annovis Inc, a specialty chemicals company, and a Senior Advisor to Across Frontiers International, Inc.

 

From 1986 – 1991 he was a Vice President/Principal of R&D Funding Corp, the General Partner of four research and development funds of Prudential Securities, Inc., from 1991 – 1997 he served as the Senior Vice President of Prudential Securities, Inc. and from 2005 – 2007 he was a non-executive director of ChemGenex Pharmaceuticals Ltd (ASX:CSX).

 

In 1971, Mr Burns arranged Minority Equity Capital Company, Inc, a multi-million dollar Venture Capital Fund, where he was President, Chief Executive Officer and a Director until 1985. Mr Burns also previously practiced law in New York with Milbank, Tweed, Hadley & McCloy. He holds a BA from Dartmouth College and an LLB (Honours) from Harvard Law School.

 

He is currently vice chairman of Euclid Systems Corp, an eye care company; chairman of StablEyes, Inc a biotechnology company also in the eye care field; and an advisor to a number of early stage biotechnology companies.

 

Robert Williamson, B.A. Economics, MBA

Independent Non-Executive Director

Remuneration Committee Member

Mr Williamson joined Progen’s board as a non-executive director in March 2008. Mr Williamson is the founder of LaSalle Venture Advisors, a consultancy serving venture-backed and public life science companies and their investors on strategic and operational issues. He currently serves as a non-executive director of Pharmasset, Inc. (NASDAQ:VRUS) (appointed in August 2004), an anti-viral therapeutics company.

 

Prior to founding LaSalle Venture Advisors, Mr Williamson served as President and CEO of Arriva Pharmaceuticals, Inc., and helped the company raise $27 million in venture capital. Previously, Mr Williamson was President and Chief Operating Officer of EOS Biotechnology, Inc., (purchased by PDL BioPharma (NASDAQ:PDLI)). Prior to this, Mr Williamson was

 

25



 

President and Chief Operating Officer of DoubleTwist, Inc. (formerly Pangea Systems), a genomics start-up. Mr Williamson began his career at The Boston Consulting Group, Inc., a global business consulting firm, where he was named a Partner, and led the firm’s west coast health care practice.

 

Mr Williamson received a MBA from the Stanford Graduate School of Business in Stanford, CA. He obtained a B.A. in Economics from Pomona College in Claremont, CA.

 

08 PARTICULARS ON DIRECTORS’ INTEREST IN SHARES AND OPTIONS

 

As at the date of this report the directors’ interests in shares and options of the Company as notified by the directors to the Australian Stock Exchange in accordance with S205G(1) of the Corporations Act 2001 were:

 

Director

 

Shares

 

Options

 

Stuart James

 

 

 

Julie Cherrington

 

 

 

John Chiplin

 

 

 

Gordon Schooley

 

7,434

 

20,000

 

Thomas Burt

 

 

 

Heng Hsin Tang

 

1,500

 

 

Joe Yeh-Chiao Lin

 

5,923

 

 

 

09 DIRECTORS’ ATTENDANCE AT BOARD AND COMMITTEE MEETINGS

 

The number of directors’ meetings held during the year and the number of meetings attended by each director were as follows:

 

 

 

Directors’

 

Audit committee

 

Remuneration

 

 

 

meetings

 

meetings

 

committee meetings

 

Director

 

A

 

B

 

A

 

B

 

A

 

B

 

Dr Mal Eutick

 

16

 

18

 

4

 

4

 

4

 

4

 

T Justus Homburg

 

24

 

24

 

 

 

 

 

Prof John Zalcberg

 

1

 

1

 

 

 

 

 

Patrick Burns

 

17

 

18

 

4

 

4

 

4

 

4

 

Stephen Chang

 

23

 

24

 

 

 

4

 

4

 

John Lee

 

16

 

18

 

4

 

4

 

 

 

Rob Williamson

 

17

 

18

 

 

 

 

 

Wolfgang Hanisch

 

6

 

6

 

 

 

 

 

 

Key

A : Number of meetings attended

B : Number of meetings held during the time the director held office or was a committee member

 

10 REMUNERATION REPORT - AUDITED

 

This remuneration report outlines the director and executive remuneration arrangements of the Company and the Group in accordance with the requirements of the Corporations Act 2001 and its regulations. For the purposes of this report, key management personnel (KMP) of the Company are defined as those persons having authority and responsibility for planning, directing and controlling the major activities of the Company, directly or indirectly, including any director (whether executive or otherwise) of the parent company, and includes the five executives in the Parent and the Group receiving the highest remuneration.

 

Details of the key management personnel (including the five highest paid executives during the year)

 

(i) Directors

 

M. Eutick

Chairman (non-executive) – resigned as Chairman 27 March 2009

T.J. Homburg

Chief Executive Officer; resigned as director 1 July 2009

S. Chang

Non-executive Director – appointed Chairman 27 March 2009; resigned 1 July 2009

J. Zalcberg

Non-executive Director – resigned 4 September 2008

 

26



 

P. Burns

Non-executive Director – resigned 27 March 2009

J. Lee

Non-executive Director – resigned 27 March 2009

R. Williamson

Non-executive Director – resigned 27 March 2009

W. Hanisch

Non-Executive Director – appointed 27 March 2009; resigned 1 July 2009

S. James

Chairman (non-executive) - appointed 1 July 2009

J. Chiplin

Non-executive Director - appointed 1 July 2009

J. Cherrington

Non-executive Director - appointed 1 July 2009

G. Schooley

Non-executive Director - appointed 1 July 2009

T. Burt

Non-executive Director - appointed 17 July 2009

H.H. Tang

Non-executive Director - appointed 17 July 2009

J.Y.C Lin

Non-executive Director - appointed 17 July 2009

 

(ii) Executives

 

L. Burns

Chief Operating Officer (resigned 9 January 2009) and Company Secretary (resigned 10 December 2008)

S. Meibusch

Vice President, Business Development – resigned 6 May 2009

J. Garner

Vice President, Medical and Clinical Affairs – resigned 8 December 2008

J. Devlin

Vice President, Manufacturing Operations – resigned 4 September 2008

A. Gautam

Vice President, Research – resigned 29 May 2008

L. Marton

Chief Scientific Officer

M. Fitzgerald

Director – Clinical Operations US

P. Dixon

General Manager – Finance and Company Secretary – appointed 3 April 2009

 

There have been no changes to the KMP after reporting date and before the date the financial report was authorised for issue.

 

A. Principles used to determine the nature and amount of remuneration

 

Remuneration Philosophy

Remuneration levels are competitively set to attract the most qualified and experienced directors and executives. The remuneration structures outlined below are designed to attract suitably qualified candidates, reward the achievement of strategic objectives, and achieve the broader outcome of creating shareholder value.

 

The Board ensures that executive reward satisfies the following criteria for good reward corporate governance practices:

·  competitiveness and reasonableness

·  acceptability to shareholders

·  performance linkage/alignment of executive compensation

·  transparency

·  capital management

 

Remuneration packages include a mix of fixed and variable remuneration including performance based bonuses and equity plans.

 

Remuneration Structure

In accordance with best practice corporate governance, the structure of non-executive director and executive remuneration is separate and distinct.

 

Non-executive Director Remuneration

Non-executive directors’ fees reflect the demands which are made on, and the responsibilities of, the directors. Non-executive directors’ fees are reviewed periodically by the Board and were last done so on 28 October 2008.

 

The Constitution and the ASX Listing Rules specify that the aggregate remuneration of the non-executive directors shall be determined from time to time by a general meeting of shareholders. The current aggregate fee pool limit is $500,000 as approved by shareholders at the 2007 AGM.

 

As of 1 July 2009, fees paid to non-executive directors amount to $60,000 per annum for each non-executive director, inclusive of board committee fees. The fees paid to the non-executive Chairman amount to $100,000, inclusive of board committee fees.

 

Retirement allowances are not paid to non-executive directors other than contributing compulsory superannuation to the directors’ fund of choice. This benefit forms part of the directors’ base fees.

 

The remuneration of non-executive directors for the period ending 30 June 2009 and 30 June 2008 is detailed in table 1 of this report.

 

Executive Remuneration

The executive pay and reward framework has two components:

·  fixed remuneration including base pay and benefits; and

·  variable remuneration including performance related bonuses and equity plans.

 

27



 

As the company continues in its research and development stage and has not been generating earnings, executive reward is linked to the achievement of specified milestones.

 

Fixed remuneration

The level of fixed remuneration is set so as to provide a base level of remuneration which is both appropriate to the position and is competitive in the market.

 

Fixed remuneration consists of base remuneration, as well as employer contributions to superannuation funds. Executives are given the opportunity to receive their fixed base remuneration in a variety of forms including cash and fringe benefits such as motor vehicles. It is intended that the manner of payment chosen will be optimal for the recipient without creating undue additional cost for the Company.

 

Fixed remuneration is reviewed annually by the remuneration committee. This process consists of a review of individual performance and overall performance of the Company. The Committee has access to external advice independent of management.

 

The Company does not pay retirement benefits to any senior executives other than contributing compulsory superannuation to the senior executives’ fund of choice. This benefit forms part of the senior executives’ base remuneration.

 

The fixed remuneration component of executives is detailed in table 2.

 

Performance related bonuses

No performance related bonuses have been accrued in the 2009 financial year for payment in the 2010 financial year.

 

Retention Bonus

During the 2009 financial year, the Vice President of Business Development and the Director of US Clinical Operations were paid retention bonuses of $50,000 (excluding superannuation) and $15,051, respectively as part of management’s plan to strengthen employees’ commitment due to consequences brought about by challenges and uncertainties in the company’s position following the cancellation of PATHWAY Phase 3 trials.

 

Retirement benefits

The company meets its obligations under the Superannuation Guarantee Legislation.

 

Equity plans

Executives are entitled to share options under The Progen Directors and Employees Option Incentive Plan. The objective of the equity plan is to reward executives in a manner that aligns remuneration with the creation of shareholder wealth. No share options were granted during 2009 under the plan.

 

Information on all options vested during the year is detailed in table 3 and further detail of the plan is in note 13.

 

Group Performance

 

In considering the consequences of the Company’s performance on shareholder wealth the Board have regard to total shareholder returns. In the Company’s case this consists of the movement in the Company’s share price and other capital management incentives. Given the current stage of the Company’s development, it has never paid a dividend and does not expect to in the near future.

 

The following table shows the change in the Company’s share price and market capitalisation as compared to the total remuneration (including the fair value of options granted, but excluding termination payments) during the current financial year and the previous four financial years:

 

 

 

2009

 

2008

 

2007

 

2006

 

2005

 

Share price at end of year

 

$

0.85

 

$

1.38

 

$

4.60

 

$

2.70

 

$

2.69

 

Change in share price

 

$

(0.53

)

$

(3.22

)

$

1.90

 

$

0.01

 

$

(0.86

)

Market capitalisation at end of year plus amounts distributed to shareholders during the year ($m’s)(1)

 

$

59.4

 

$

83.3

 

$

273.3

 

$

109.6

 

$

109.1

 

Change in market capitalisation ($m’s)

 

$

(23.9

)

$

(190.0

)

$

163.7

 

$

0.50

 

$

(13.4

)

Total executive remuneration ($m’s)

 

$

1.56

 

$

2.38

 

$

1.71

 

$

1.36

 

$

1.18

 

 


(1) The company executed a $39.420 million off-market share buy-back in April 2009.

 

28



 

B. Details of remuneration of key management personnel

 

Table 1. Non-executive directors’ remuneration for the year ended 30 June 2009.

 

 

 

 

 

 

 

 

 

 

 

Post

 

 

 

Share-

 

 

 

 

 

 

 

Short term

 

employment

 

 

 

based

 

 

 

 

 

 

 

Salary and

 

Cash

 

Non monetary

 

Super-

 

Termination

 

payment

 

 

 

Directors

 

fees

 

bonus

 

benefits

 

annuation

 

Payment

 

Options

 

Total

 

 

 

 

 

$

 

$

 

$

 

$

 

$

 

$

 

$

 

Mal Eutick(1)

 

2009

 

67,788

 

 

 

6,101

 

 

 

73,889

 

 

 

2008

 

67,043

 

 

 

6,034

 

 

 

73,077

 

Stephen Chang(2)

 

2009

 

119,730

 

 

 

5,826

 

 

 

125,556

 

 

 

2008

 

258,495

 

 

 

32,167

 

145,000

 

 

435,662

 

John Zalcberg(3)

 

2009

 

12,608

 

 

 

1,135

 

 

 

13,743

 

 

 

2008

 

55,046

 

 

 

4,954

 

 

 

60,000

 

Patrick Burns(1)

 

2009

 

44,333

 

 

 

 

 

 

44,333

 

 

 

2008

 

60,000

 

 

 

 

 

 

60,000

 

John Lee(1)

 

2009

 

45,000

 

 

 

 

 

 

45,000

 

 

 

2008

 

19,450

 

 

 

 

 

 

19,450

 

Rob Williamson(1)

 

2009

 

44,333

 

 

 

 

 

 

44,333

 

 

 

2008

 

19,450

 

 

 

 

 

 

19,450

 

Wolfgang Hanisch(4)

 

2009

 

11,526

 

 

 

4,307

 

 

 

15,833

 

 

 

2008

 

 

 

 

 

 

 

 

Total - Non-exective directors

 

2009
2008

 

345,318
479,484

 


 


 

17,369
43,155

 


145,000

 


 

362,687
667,639

 

 


(1)

Resigned 27 March 2009

(2)

Resigned as Executive Chairman on 3 March 2008 and continued as Non-Executive Director until 27 March 2009 when he was appointed as Non-Executive Chairman until 1 July 2009

(3)

Resigned 4 September 2008

(4)

Appointed 27 March 2009

 

29



 

Table 2. Remuneration for the other key management personnel for the year ended 30 June 2009.

 

 

 

 

 

 

 

 

 

 

 

Post

 

 

 

Share-

 

 

 

 

 

 

 

Short term

 

employment

 

 

 

based

 

 

 

Other key management

 

Salary and

 

Cash

 

Non monetary

 

Super-

 

Termination

 

payment

 

 

 

personnel

 

fees

 

bonus

 

benefits

 

annuation

 

Payment

 

Options

 

Total

 

 

 

 

 

$

 

$

 

$

 

$

 

$

 

$

 

$

 

T Justus Homburg

 

2009

 

295,083

 

 

18,959

(1)

25,377

 

 

32,099

 

371,518

 

 

 

2008

 

287,703

 

138,608

 

7,386

 

28,889

 

 

135,259

 

597,845

 

Linton Burns(3)

 

2009

 

93,707

 

 

 

28,151

 

 

 

121,858

 

 

 

2008

 

190,000

 

68,807

 

 

23,293

 

 

109,609

 

391,709

 

Anand Gautam(7)

 

2009

 

 

 

 

 

 

 

 

 

 

2008

 

150,744

 

 

 

13,200

 

100,000

 

54,304

 

318,248

 

Sarah Meibusch(4)

 

2009

 

138,680

 

50,000

 

 

15,586

 

98,942

 

11,061

 

314,269

 

 

 

2008

 

117,546

 

 

 

10,579

 

 

109,609

 

237,734

 

James Garner(5)

 

2009

 

89,974

 

 

 

7,322

 

 

 

97,296

 

 

 

2008

 

175,000

 

 

 

15,750

 

 

55,305

 

246,055

 

John Devlin(6)

 

2009

 

17,363

 

 

 

8,022

 

23,077

 

 

48,462

 

 

 

2008

 

150,000

 

 

 

13,500

 

 

55,305

 

218,805

 

Laurence Marton(9)

 

2009

 

419,004

 

 

 

30,115

(2)

 

30,416

 

479,535

 

 

 

2008

 

133,268

 

 

 

11,711

(2)

 

36,073

 

181,052

 

Michael Fitgerald

 

2009

 

169,888

 

15,051

 

 

14,902

(2)

 

13,314

 

213,155

 

 

 

2008

 

 

 

 

 

 

 

 

Paul Dixon(8)

 

2009

 

34,763

 

 

 

 

3,129

 

 

 

37,892

 

 

 

2008

 

 

 

 

 

 

 

 

 

Total – other key management personnel

 

2009
2008

 

1,258,462
1,204,261

 

65,051
207,415

 

18,959
7,386

 

132,604
116,922

 

122,019
100,000

 

86,890
555,464

 

1,683,985
2,191,448

 

 


(1)

This represents a car under a novated lease arrangement.

(2)

This represents US based health plans

(3)

Resigned 9 January 2009

(4)

Resigned 6 May 2009

(5)

Resigned 8 December 2008

(6)

Resigned 4 September 2008

(7)

Resigned 29 May 2008

(8)

Appointed 3 April 2009

(9)

Appointed 6 February 2008

 

C. Service agreements

 

With the exception of Dr Laurence Marton’s agreement the Company’s policy is to enter into service contracts with executive directors and senior executives on appointment that are unlimited in term but capable of termination on specified notice periods and that the Company has the right to terminate the contract immediately, by making payment equal to the specified notice period as pay in lieu of notice other than for misconduct when termination is immediate. The executive directors and senior executives are also entitled to receive on termination of employment their statutory entitlements of accrued annual leave and long service leave.

 

The service contract outlines the components of remuneration paid to the executive directors and key management personnel but does not prescribe how remuneration levels are modified year to year.

 

30



 

The current base remuneration, short-term incentive arrangements and termination notice periods included in the service agreements with key management personnel are detailed below.

 

T J Homburg, Chief Executive Officer

·  Term of agreement – unlimited, capable of termination on 6 months notice.

·  Base salary, inclusive of superannuation, of $320,460, last reviewed on 1 July 2008.

·  Provision of a fully maintained motor vehicle.

·  Short-term incentive per annum dependent on achievement of strategic and operational objectives, as set by the Board, of up to 40% of his base salary.

 

P Dixon, General Manager - Finance and Company Secretary

·  Term of agreement – unlimited, capable of termination on notice of 12 weeks.

·  Base salary, inclusive of superannuation, of $158,050, last reviewed on 3 April 2009.

 

L Marton, US-based Chief Scientific Officer

·  Term of agreement – 1 year commencing 6 February 2009.

·  Base salary of $US308,000.

·  Short-term incentive per annum dependent on achievement of strategic and operational objectives, as set by the Board, of up to 40% of his base salary.

 

D. Share-based payments

 

During the course of the 2009 financial year the following options were vested to key management personnel of the Company under the terms of The Progen Directors and Employee Option Incentive Plan. No options were granted to Directors during the 2009 financial year.

 

Table 3. Number of options vested and forfeited during the year

 

 

 

 

 

 

 

No. of

 

No. of

 

No. of options

 

 

 

Fair Value

 

 

 

 

 

 

 

 

 

options

 

options

 

forfeited /

 

Exercise

 

per option

 

Date

 

 

 

Grant date

 

Expiry date

 

granted

 

vested

 

expired

 

price

 

at grant date

 

excercisable

 

T J Homburg

 

30-Nov-2006

 

1-Mar-2011

 

 

166,666

 

 

$

1.07

 

$

0.98

 

1-Mar-2009

 

 

 

8-Apr-2006

 

8-Nov-2008

 

 

 

30,000

(3)

$

3.09

 

$

0.78

 

8-Apr-2006

 

L Burns

 

14-Sep-2007

 

13-Sep-2012

 

 

50,000

 

50,000

(2)

$

3.61

 

$

1.33

 

14-Sep-2008

 

 

 

14-Sep-2007

 

13-Sep-2012

 

 

 

50,000

(2)

$

3.61

 

$

1.09

 

14-Sep-2007

 

A Gautam

 

14-Sep-2007

 

13-Sep-2012

 

 

 

50,000

(1)

$

3.61

 

$

1.33

 

14-Sep-2008

 

 

 

14-Sep-2007

 

13-Sep-2012

 

 

 

50,000

(2)

$

3.61

 

$

1.09

 

14-Sep-2007

 

S Meibusch

 

14-Sep-2007

 

13-Sep-2012

 

 

50,000

 

 

$

3.61

 

$

1.33

 

14-Sep-2008

 

J Garner

 

14-Sep-2007

 

13-Sep-2012

 

 

50,000

 

50,000

(2)

$

3.61

 

$

1.33

 

14-Sep-2008

 

J Devlin

 

14-Sep-2007

 

13-Sep-2012

 

 

 

50,000

(1)

$

3.61

 

$

1.33

 

14-Sep-2008

 

L Marton

 

1-Feb-2008

 

1-Feb-2013

 

 

75,000

 

 

$

2.22

 

$

0.66

 

1-Feb-2009

 

M Fitzgerald

 

10-Mar-2008

 

10-Mar-2013

 

 

25,000

 

 

$

1.42

 

$

0.53

 

10-Mar-2009

 

 


(1) Forfeited options due to resignation

(2) Expired options due to resignation

(3) Option expiry date reached

 

31



 

The following table summarises the value of options granted, exercised or lapsed during the 2008 financial year to directors and key management personnel.

 

 

 

Value of options

 

Value of options

 

Value of options

 

Value of options

 

Remuneration

 

 

 

granted during

 

exercised during

 

expired during

 

expired during

 

consisting of options

 

 

 

the year^

 

the year

 

the year

 

the year

 

for the year

 

 

 

$

 

$

 

$

 

$

 

%

 

T J Homburg

 

 

 

23,400

 

 

8.6

 

L Burns

 

 

 

120,670

 

 

 

A Gautam

 

 

 

54,304

 

66,366

 

 

S Meibusch

 

 

 

 

 

3.5

 

J Garner

 

 

 

66,366

 

 

 

J Devlin

 

 

 

 

66,366

 

 

L Marton

 

 

 

 

 

6.3

 

M Fitzgerald

 

 

 

 

 

6.2

 

 


^ For details on the valuation of options, including models and assumptions used, please refer to note 13.

 

During the year no options were exercised by directors or key management personnel.

 

The Board has a policy prohibiting directors or executives entering into contracts to hedge their exposure to options or shares granted as part of their remuneration. The Board periodically requests directors and executives confirm they are in compliance with this policy.

 

11 LOANS TO DIRECTORS AND EXECUTIVES

 

No loans have been paid to Company directors or executives during or since the end of the financial year.

 

12 ENVIRONMENTAL REGULATIONS

 

The Company complies with all environmental regulations applicable to its operations and there have been no significant known breaches.

 

13 ROUNDING

 

The amounts contained in this report and in the financial report have been rounded to the nearest $1,000 (where rounding is applicable) under the option available to the Company under ASIC Class Order 98/0100. The Company is an entity to which the Class Order applies.

 

14 INDEMNIFICATION AND INSURANCE OF DIRECTORS AND OFFICERS

 

The Company has agreed to indemnify directors in respect of certain liabilities incurred while acting as a director of any group company. No liability has arisen under these indemnities as at the date of this report.

 

The Company has agreed to use its reasonable endeavours to arrange insurance for the directors against certain risks the director is exposed to as a director of the Group Companies.

 

During the year, the Company paid a premium to insure the directors, company secretary and other executive staff. Under the terms and conditions of the insurance arrangements, disclosure of the nature of the insurance and the premium is prohibited.

 

The liabilities insured include costs and expenses that may be incurred in defending any wrongful, but not wilful, act, error or omission by the officers in their capacity as officers of the Company.

 

No other insurance premiums have been paid or indemnities given, during or since the end of the year, for any person who is or has been an officer or auditor of the Company.

 

32



 

15 AUDITOR INDEPENDENCE AND NON-AUDIT SERVICES

 

A copy of the Company’s auditors’ independence declaration is set out on page 34.

 

Non-audit services

During the year, there were no non-audit services provided by the entity’s auditor, Ernst & Young.

 

Signed in accordance with a resolution of the directors.

 

S. James

J. Chiplin

Chairman

Director

 

 

 

 

Date: 31 August 2009

Date: 31 August 2009

 

33



 

1 Eagle Street

Brisbane QLD 4000 Australia

GPO Box 7878 Brisbane QLD 4001

 

Tel: +61 7 3011 3333

Fax: +61 7 3011 3100

www.ey.com/au

 

Auditor’s Independence Declaration to the Directors of Progen Pharmaceuticals Limited

 

In relation to our audit of the financial report of Progen Pharmaceuticals Limited for the financial year ended 30 June 2009, to the best of my knowledge and belief, there have been no contraventions of the auditor independence requirements of the Corporations Act 2001 or any applicable code of professional conduct.

 

 

Ernst & Young

 

 

 

 

 

 

Winna Brown

 

Partner

 

31 August 2009

 

 

34



 

Income statement for the year ended

30 June 2009

 

Income Statement

 

 

 

 

 

Consolidated

 

Parent

 

 

 

Notes

 

2009

 

2008

 

2009

 

2008

 

 

 

 

 

$’000

 

$’000

 

$’000

 

$’000

 

REVENUE

 

4

(a)

4,940

 

6,478

 

3,700

 

5,435

 

 

 

 

 

 

 

 

 

 

 

 

 

Other income from ordinary activities

 

4

(b)

7,021

 

1,121

 

6,981

 

1,121

 

 

 

 

 

 

 

 

 

 

 

 

 

Research and development expenses

 

 

 

7,049

 

16,145

 

3,771

 

14,841

 

Manufacturing facility expenses

 

 

 

1,683

 

2,721

 

 

 

Administrative and corporate expenses

 

 

 

8,689

 

10,833

 

7,496

 

10,270

 

Impairment of intercompany receivable

 

4

(g)

 

 

6,636

 

 

Finance costs

 

4

(c)

7

 

19

 

7

 

19

 

Other expenses

 

4

(h)

 

4,029

 

 

4,029

 

 

 

 

 

 

 

 

 

 

 

 

 

LOSS FROM CONTINUING OPERATIONS BEFORE INCOME TAX EXPENSE

 

 

 

(5,467

)

(26,148

)

(7,229

)

(22,603

)

INCOME TAX EXPENSE

 

5

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

LOSS FROM CONTINUING OPERTIONS AFTER INCOME TAX EXPENSE

 

 

 

(5,467

)

(26,148

)

(7,229

)

(22,603

)

DISCONTINUED OPERTATIONS

 

 

 

 

 

 

 

 

 

 

LOSS FROM DISCONTINUED OPERATIONS AFTER TAX

 

3

 

 

 

(124

)

(1,635

)

 

 

 

 

 

 

 

 

 

 

 

 

NET LOSS ATTRIBUTABLE TO MEMBERS
OF PROGEN PHARMACEUTICALS LIMITED

 

 

 

(5,467

)

(26,148

)

(7,353

)

(24,238

)

 

 

 

 

 

 

 

 

 

 

 

 

Basic and diluted loss per share (cents per share)

 

6

 

(10.0

)

(43.3

)

 

 

 

 

 

The above income statement should be read in conjunction with the accompanying notes.

 

35



 

Balance sheet as at

30 June 2009

 

Balance Sheet

 

 

 

 

 

Consolidated

 

Parent

 

 

 

Notes

 

2009

 

2008

 

2009

 

2008

 

 

 

 

 

$’000

 

$’000

 

$000

 

$000

 

ASSETS

 

 

 

 

 

 

 

 

 

 

 

Current Assets

 

 

 

 

 

 

 

 

 

 

 

Cash and cash equivalents

 

8

 

28,045

 

76,748

 

27,248

 

76,451

 

Trade and other receivables

 

9

 

294

 

722

 

218

 

722

 

Prepayments

 

 

 

138

 

187

 

117

 

128

 

Government grants

 

 

 

 

302

 

 

302

 

Total Current Assets

 

 

 

28,477

 

77,959

 

27,583

 

77,603

 

 

 

 

 

 

 

 

 

 

 

 

 

Non-current Assets

 

 

 

 

 

 

 

 

 

 

 

Restricted term deposits

 

 

 

100

 

98

 

87

 

87

 

Prepayments

 

 

 

199

 

 

199

 

 

Other receivables

 

9

 

 

 

223

 

2,328

 

Investment in subsidiaries

 

10

 

 

 

3,814

 

3,278

 

Plant & equipment

 

11

 

881

 

1,170

 

367

 

1,135

 

Intangible assets

 

12

 

3,005

 

3,364

 

 

 

Total Non-current Assets

 

 

 

4,185

 

4,632

 

4,690

 

6,828

 

 

 

 

 

 

 

 

 

 

 

 

 

TOTAL ASSETS

 

 

 

32,662

 

82,591

 

32,273

 

84,431

 

 

 

 

 

 

 

 

 

 

 

 

 

LIABILITIES

 

 

 

 

 

 

 

 

 

 

 

Current Liabilities

 

 

 

 

 

 

 

 

 

 

 

Trade and other payables

 

14

 

1,433

 

6,525

 

1,209

 

6,410

 

Provisions

 

15

 

229

 

312

 

92

 

296

 

Derivative financial instruments

 

16

 

 

249

 

 

249

 

Government grants

 

 

 

 

9

 

 

9

 

Total Current Liabilities

 

 

 

1,662

 

7,095

 

1,301

 

6,964

 

 

 

 

 

 

 

 

 

 

 

 

 

Non-current Liabilities

 

 

 

 

 

 

 

 

 

 

 

Provisions

 

15

 

210

 

237

 

197

 

237

 

Total Non-current Liabilities

 

 

 

210

 

237

 

197

 

237

 

 

 

 

 

 

 

 

 

 

 

 

 

TOTAL LIABILITIES

 

 

 

1,872

 

7,332

 

1,498

 

7,201

 

 

 

 

 

 

 

 

 

 

 

 

 

NET ASSETS

 

 

 

30,790

 

75,259

 

30,775

 

77,230

 

 

 

 

 

 

 

 

 

 

 

 

 

EQUITY

 

 

 

 

 

 

 

 

 

 

 

Contributed equity

 

17

 

152,217

 

191,357

 

152,217

 

191,357

 

Reserves

 

18

 

3,300

 

3,162

 

3,261

 

3,223

 

Accumulated losses

 

18

 

(124,727

)

(119,260

)

(124,703

)

(117,350

)

 

 

 

 

 

 

 

 

 

 

 

 

TOTAL EQUITY

 

 

 

30,790

 

75,259

 

30,775

 

77,230

 

 

The above balance sheet should be read in conjunction with the accompanying notes.

 

36



 

Statement of changes in equity for the year ended

30 June 2009

 

Statement of Changes in Equity

 

 

 

Number of ordinary

 

 

 

Accumulated

 

Options

 

 

 

 

 

shares

 

Amount

 

losses

 

reserve

 

Total

 

 

 

 

 

$’000

 

$’000

 

$’000

 

$’000

 

Consolidated

 

 

 

 

 

 

 

 

 

 

 

At 1 July 2007

 

59,416,427

 

189,194

 

(93,112

)

1,895

 

97,977

 

Loss of the period

 

 

 

(26,148

)

 

(26,148

)

Foreign currency translation reserve

 

 

 

 

(61

)

(61

)

Total income/expense for the period

 

 

 

(26,148

)

(61

)

(26,209

)

Transaction costs related to shares issued prior to 30 June 2007

 

 

(265

)

 

 

(265

)

Ordinary shares issued as part of acquisition agreement

 

604,959

 

1,119

 

 

 

1,119

 

less transaction costs

 

 

(5

)

 

 

(5

)

Ordinary shares issued as part of acquisition agreement

 

201,265

 

372

 

 

 

372

 

less transaction costs

 

 

(3

)

 

 

(3

)

Ordinary shares issued as part of termination agreement

 

171,240

 

947

 

 

 

947

 

less transaction costs

 

 

(2

)

 

 

(2

)

Share-based payments to employees

 

 

 

 

1,328

 

1,328

 

At 30 June 2008

 

60,393,891

 

191,357

 

(119,260

)

3,162

 

75,259

 

 

 

 

Number of ordinary

 

 

 

Accumulated

 

Options

 

 

 

 

 

shares

 

Amount

 

losses

 

reserve

 

Total

 

 

 

 

 

$’000

 

$’000

 

$’000

 

$’000

 

Consolidated

 

 

 

 

 

 

 

 

 

 

 

At 1 July 2008

 

60,393,891

 

191,357

 

(119,260

)

3,162

 

75,259

 

Loss of the period

 

 

 

(5,467

)

 

(5,467

)

Foreign currency translation reserve

 

 

 

 

100

 

100

 

Total income/expense for the period

 

 

 

(5,467

)

100

 

(5,367

)

Ordinary shares issued as part of Cellgate acquisition agreement

 

151,240

 

280

 

 

 

280

 

Off market share buy-back

 

(35,836,034

)

(39,420

)

 

 

(39,420

)

Share-based payments to employees

 

 

 

 

38

 

38

 

At 30 June 2009

 

24,709,097

 

152,217

 

(124,727

)

3,300

 

30,790

 

 

The above statement of changes in equity should be read in conjunction with the accompanying notes.

 

37



 

Statement of changes in equity for the year ended

30 June 2009

 

Statement of Changes in Equity (Cont’d)

 

 

 

Number of ordinary

 

 

 

Accumulated

 

Options

 

 

 

 

 

shares

 

Amount

 

losses

 

reserve

 

Total

 

 

 

 

 

$’000

 

$’000

 

$’000

 

$’000

 

Parent

 

 

 

 

 

 

 

 

 

 

 

At 1 July 2007

 

59,416,427

 

189,194

 

(93,112

)

1,895

 

97,977

 

Loss of the period

 

 

 

(24,238

)

 

(24,238

)

Total income/expense for the period

 

 

 

(24,238

)

 

(24,238

)

Transaction costs related to shares issued prior to 30 June 2007

 

 

(265

)

 

 

(265

)

Ordinary shares issued as part of acquisition agreement

 

604,959

 

1,119

 

 

 

1,119

 

less transaction costs

 

 

(5

)

 

 

(5

)

Ordinary shares issued as part of acquisition agreement

 

201,265

 

372

 

 

 

372

 

less transaction costs

 

 

(3

)

 

 

(3

)

Ordinary shares issued as part of termination agreement

 

171,240

 

947

 

 

 

947

 

less transaction costs

 

 

(2

)

 

 

(2

)

Share-based payments to employees

 

 

 

 

1,328

 

1,328

 

At 30 June 2008

 

60,393,891

 

191,357

 

(117,350

)

3,223

 

77,230

 

 

 

 

Number of ordinary

 

 

 

Accumulated

 

Options

 

 

 

 

 

shares

 

Amount

 

losses

 

reserve

 

Total

 

 

 

 

 

$’000

 

$’000

 

$’000

 

$’000

 

Parent

 

 

 

 

 

 

 

 

 

 

 

At 1 July 2008

 

60,393,891

 

191,357

 

(117,350

)

3,223

 

77,230

 

Loss of the period

 

 

 

(7,353

)

 

(7,353

)

Total income/expense for the period

 

 

 

(7,353

)

 

(7,353

)

Ordinary shares issued as part of Cellgate acquisition agreement

 

151,240

 

280

 

 

 

280

 

Off market share buy-back

 

(35,836,034

)

(39,420

)

 

 

(39,420

)

Share-based payments to employees

 

 

 

 

38

 

38

 

At 30 June 2009

 

24,709,097

 

152,